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18/3/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Mar 18, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
    Likes Received:
    The Fed's pledge to provide greater support to mortgage lending purchasing up to an additional $750 billion of agency mortgage-backed securities to bring the total of its purchases of them to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a totally to $200 b and to improve conditions in private credit markets, the Committee decided too to purchase up to $300 billion of longer-term Treasury securities in the next six months. The greenback came under strong pressure after this announcement which came accompanied with dovish growth outlook expected by the fed and underestimation of the inflation upside risks outlook because of the credit crisis and the recession pressure which is expected to continue more than expected.

    The gold pushed to 930$ after the Fed's rate decision to keep the interest rate unchanged at .25% injecting more funds in forms of buying bad mortgages loans which caused the problem and long term US treasury for providing funds to the governmental stimulating plans in another step of its quantitive easing policy to spur investment for finding a closer recovery point as what has been read from Bernenke's testimony recently that the will of change is very important to get out from this crisis and he is looking working for this with no delay.

    In the same time, the quantitive easing policy can increase the budget deficit and threat the creditability and the trust in the US treasuries increasing the pressure on the greenback across the broad especially versus the single currency as the Europeans are looking conservative in adopting such policies comparing with US.

    Best wishes

    FX Consultant
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com

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